Rent Control is a Horrible Idea!

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Rent control, an absolutely horrible idea that the state of California put in place just last week, they passed a bill on it. Congratulations, California, you have done it again. You have passed another law, another requirement, another fee. You guys just keep doing it, year after year, to make building more and more difficult. There was actually talk of rent control in Boston of bringing it back, back in April. It seems to have fizzled out since then. I hope it stays fizzled out because our housing here has actually been doing better over the last few years.

Since Mayor Marty Walsh took over, there has been an increase in the amount of housing production. Though it’s not as good as we would like to have it, though the permitting process is not as easy as I would like to see it, it has improved. I just hope that our lawmakers in Massachusetts understand that rent control does not work. A couple of reasons it does not work. If you’re a landlord, why do you want to buy investment properties when there is rent control. That is going to dissuade people from buying them. If you’re not going to buy new properties, you’re also not going to upkeep your properties.

Now, Department of Inspectional Services in Boston does a darn good job making sure that landlords keep up with their properties, and frankly, it was necessary. I really don’t think they overdo it. We manage several properties in Boston, and I think that they’re pretty reasonable, though some old school landlords complain about them. You cannot hit landlords from both sides. You cannot say, “You have to keep your properties at a certain level and not be a slumlord. Oh, and you need to keep your rent down.” That doesn’t work, folks. That doesn’t work economically. No one will do it.

Now, look at California. They’ve put this in place. Now California has twice the housing crisis that we do, and it’s their fault. It is the fault of their lawmakers because the majority of them, not all, have it backwards. I actually read a great article on Sunday in The Wall Street Journal by the mayor of San Diego, who said, “We need to stop with this not in my backyard attitude, and we need to have a yes, in my backyard attitude.” He has it right, but the majority of the state doesn’t. San Francisco and Los Angeles, both beautiful cities in a wonderful state, full of great people, continue to make things more and more difficult.

My friends, when you put more fees in place on builders, when you put requirements in place to make it more and more difficult to build, all you’re doing is driving up building costs. That dissuades builders, developers, and landlords from creating more units. Think about that. If you’re a builder, developer or a landlord, what is your incentive to create more units? What is your incentive to rent units? I hope it never happens here in Boston. I hear that it had happened several decades ago before I was in the business, and they actually saw crime rates increase. Doesn’t surprise me a bit.

You’re going to see that in California, where there’s also a tremendous amount of homelessness in California, which is very sad. There’s a lot of good people that have been displaced out of their homes, and it’s absolutely terrible. If people want to solve that, what you need to do is reverse your policy. Pretty much everything that you’ve been doing in California over the last five years, go back, undo it and do the opposite. That will create more housing and that’ll solve the problem. Make zoning easier. Stop with all these rules about forcing solar and all these other things and just let builders build homes.

Get rid of these multi-family rules. We’ve talked about that a lot here in Massachusetts and we’ve been working with the governor and our Association of Realtors on trying to improve that because there’s too many rules around minimum loft requirements and so on. If everybody out there who’s listening truly wants to solve the housing crisis from stopping– When I say crisis, it’s not the crisis of ’08. We have the opposite problem now. Not enough housing stock. If you truly want to solve that, make it easier, and you will solve it.

The thing that I want to make clear is this here is a horrible idea and it’s going to punish no one more than it will punish tenants in the end. They’re going to get the short end of the stick, and I think it’s terrible. I hope we never take it up here in Massachusetts. Sorry for the rant. I might have sounded a little bit harsh about it. I’m obviously passionate about real estate and I’m passionate about our state and our country being able to provide the sufficient amount of housing that is needed. That’s why I feel that way.

Leave your comments, ask questions, whatever you want. Disagree with me, it’s okay. Let’s have a respectful discussion and hopefully, move towards solving the housing crisis. I’ll end with what I started with, rent control is a horrible idea. Have a good day.